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Trump Administration: WaterFix Economics Flop, Again

ICYMI 4/10/17
Valley Economy: WaterFix Economics Flop, Again
On Friday, on his blog “Valley Economy” Dr. Jeffrey Michael, Director of the Center for Business and Policy Research at the University of the Pacific, took a look at two recent lists of infrastructure projects being considered by the Trump administration.
In both cases, the California WaterFix (Delta Tunnels) proposal “falls short of the state and Governor’s claims about its economic performance.”
The first report was conducted for the U.S. Treasury Department and identifies 40 priority transportation and water infrastructure proposals in the U.S.
Dr. Michael says:

“…it is increasingly clear that I am not the only analyst to conclude that the WaterFix has a lousy benefit-cost ratio. By the way, three California projects did make the final list of 40 recommended projects: 1) CA High-Speed Rail, 2) MTC managed lanes (HOV, express lanes) throughout the Bay Area freeway network, and 3) Sutter Basin flood control improvements (note, this assessment was done prior to the Oroville crisis). Yes, it is true that high-speed rail has stronger economic justification than the Delta tunnels, although its financial viability is equally questionable. Bottom Line: WaterFix failed to make the cut in a list of major infrastructure projects evaluated on their economic merit, while HSR and HOV lanes made it.”

The second notable recent assessment was done by consultants for the Trump transition team.

“The WaterFix does make this list of 50 priority projects, but it is notable that the assessment finds that it needs a large taxpayer subsidy. The consultants estimate that user revenue is only sufficient to pay 50% of project costs, in sharp contrast to a decade of statements by the state and water contractors that they would pay 100% of the projects costs.”

Dr. Michael adds:

“It amazes me that anyone still believes public officials who say the tunnels can be built without substantial taxpayer funds. While it has taken a long time, the media and the public are slowly catching on. And now it appears that infrastructure consulting firms working for the federal government, who have a strong incentive to promote mega-infrastructure projects, recognize that the project can not be financed as claimed by project proponents and that the overall economic justification is lacking.”


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